The Evolution of Crypto Mining

Published on
February 10th, 2021
Duration
58 minutes


The Evolution of Crypto Mining

The Interview - Crypto ·
Featuring Jesse Phillips and Santiago Velez

Published on: February 10th, 2021 • Duration: 58 minutes

Jesse Phillips, business development manager at Binance Pool, joins Santiago Velez, co-founder and R&D division lead for Block Digital, to discuss Binance Pool and the changing dynamics in crypto mining. Phillips explains that mining takes computational power and applies that to verifying transactions on a public blockchain network for a reward. He points out the fact that the dynamic of mining has changed over the past few years as competition has grown, pushing many miners into mining pools, which aggregate computational power from many users to collaboratively mine and split rewards. Phillips dives into the market around application-specific integrated circuit (ASICs), stating that hardware for mining has its own cyclical markets as they are related but not strongly correlated to cryptocurrency speculation. Filmed on January 25, 2021.

Key Learnings: Application-specific integrated circuit (ASICs) mining hardware has its own market dynamics with separate factors than the cryptocurrencies they are mining. Mining pools are becoming increasingly important as mining becomes more competitive. Since solo miners get priced out, they need to join pools to have a chance at receiving any reward. Hardware and chip manufacturers are increasingly selling based on hash rate output and rewards rather than just hardware costs.

Comments

Transcript

  • EB
    Edward B.
    11 February 2021 @ 20:24
    Even though the technology is over my head, they both articulated various aspects so well, I was able to glean some very good insight. They are both incredibly smart and well grounded. I typically fall asleep during these types of interviews, but they made it interesting. Kudos gents!
    • JP
      Jesse P.
      16 February 2021 @ 16:42
      High praise. Thank you Edward!
  • CF
    Christopher F.
    10 February 2021 @ 22:40
    Great convo. Would have liked to hear a discussion on concentration of mining in China. From what I understand, part of the reason for the concentration is because many mining pools are located in China. So perhaps there is less of a 51% attack risk than ppl throw around?
    • JS
      John S.
      10 February 2021 @ 22:51
      Yes, this seems to be Mike Green's argument that the network is vulnerable to attack by a non-economic player such as China even if in the near term BTC is more useful as a source of US$
    • EF
      Eric F.
      15 February 2021 @ 20:56
      Yeah, Mike happily lectures on the security issues and unpatriotic nature of participating in Bitcoin (if you're American of course), via tweets from the sanctity of his 100% Chinese exported iPhone.
  • DR
    Derrick R.
    11 February 2021 @ 12:09
    Are we saying it’s now profitable again for the individual to engage in mining with a GPU card, because they can join a large mining pool?
    • JS
      Jim S.
      12 February 2021 @ 13:39
      It's profitable to use GPUs on ETH - not sure about BTC
    • SV
      Santiago V. | Contributor
      14 February 2021 @ 15:52
      That's correct Jim.
  • AL
    Aaron L.
    12 February 2021 @ 00:02
    Would have been nice if they talked about the concentration in China and its implications. But Santiago is a 1st class mind on this topic, so I hope he dives into this at some point.
    • SV
      Santiago V. | Contributor
      14 February 2021 @ 15:51
      I will, I promise!!
  • NL
    Nicholas L.
    12 February 2021 @ 02:32
    Fascinating discussion on an area of crypto I've always been curious about but didn't know where to find out accurate information. Thank you Santiago and Jesse!
    • SV
      Santiago V. | Contributor
      14 February 2021 @ 15:51
      You are welcome!
  • PD
    Patrick D.
    13 February 2021 @ 05:47
    This was a perfect pairing and should be revisited on 6-12 month intervals. Those minds and their passions are fascinating. Thank you for sharing.
    • SV
      Santiago V. | Contributor
      14 February 2021 @ 15:51
      Thanks Patrick!
  • tc
    thomas c.
    11 February 2021 @ 01:13
    I read the comments before watching RV vids. Very helpful to decide to watch or not so maybe this was answered. What happens if btc activity really picks up the next few yrs and we get closer to the last coin faster than anyone thinks. Will the the cost of mining become prohibitive or will btc price keep rising. And then when it's done what incentive is there to validate?
    • SV
      Santiago V. | Contributor
      11 February 2021 @ 04:50
      The issuance rate of Bitcoin is fixed, no amount of mining can change that rate only the development community can adjust the code base and then have the community accept it. The cost of mining with respect to the underlying asset has often times been net negative, it's a very low margin business unless you are in the bull run cycle. The real issue to concern ourselves with is when the issuance rate of Bitcoin becomes low from halvings but the underlying bitcoin price in fiat terms is so liquid / stable that competition drives individual miner yields below the CapEx / OpEx costs to do so. We could consolidation of mining into monopolies / duopolies and then we'll have a problem with arbitrary network fees (essentially all transactions could be hostage to the miners). Not a fun endgame.
  • RB
    Roberta B.
    10 February 2021 @ 11:18
    Both, absolutely FANTASTIC. Thank you very much. I hope there will be a transcript: it would help us digest, cultivate and bring to fruition what we heard. Why? I want to pay attention to what Santiago and Jesse shared: so many pearls, so much hidden value! This is what happens when constructive minds talk to each other. "Since everything is a reflection of our minds...everything can be changed by our minds." Buddha - Binance has helped us immensely, in creating a very promising (more honest and easier) reality. I feel extraordinary joyful for their success, not only in terms of the monetary value of BNB. Smile :-)
    • SV
      Santiago V. | Contributor
      11 February 2021 @ 01:06
      Thanks Roberta!
  • MJ
    Marius J.
    10 February 2021 @ 13:22
    10/10